Early Look

Tuesday, October 18, 2022

Futures	Up/Down	%	Last
Dow	366.00	1.21%	30,596
S&P 500	53.25	1.44%	3,742
Nasdaq	187.50	1.69%	11,297

 

 

U.S. futures are soaring, extending the strong gains from yesterday as momentum builds (at least in the short-term) into earnings season, with results in big tech, financials, and healthcare expected this week. U.S. stocks gained on Monday with global risk appetite underpinned after UK Finance minister Hunt announced a reversal of most of the measures in the ‘mini-budget’, while banks earnings also provided a tailwind. Gains were broad based as the tech heavy Nasdaq 100 gained 3.5% in its biggest one-day rally since July 27 while the breadth of the rally was so strong that at one point over 99% of the companies in the U.S. benchmark were advancing. The U.S. dollar hits fresh 32-year high vs yen, past 149 yen while Treasury yields resumed their upward rise. At the same time, one of the markets biggest bears, Morgan Stanley strategist Mike Wilson, turned short term bullish saying “this is a good spot to cover some shorts and let this bear breathe” and expects a rally that could send the S&P as high as 4,150 potentially. The Bull case for the rally in beaten up YTD tech gainers yesterday included: many companies have guided lower (low bar) such as AMD, NVDA, AMAT; for-ex impact partially priced in; China export ban may be overblown, and multiples have compressed. In Asian markets, The Nikkei Index gained 380 points to 27,156, the Shanghai Index dipped -3 points to 3,080, and the Hang Seng Index jumped 301 points to 16,914. In Europe, the German DAX is up 1% at 12,775, while the FTSE 100 rises +0.8% to 6,975. In the UK, finance minister Hunt, who has essentially shredded the economic agenda of new Prime Minister Liz Truss, has said tax hikes and spending cuts will likely feature in his late October budget, while the Financial Times reported that the Bank of England will delay plans to see around $950 billion worth of bonds from its balance sheet to ensure bond market stability.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 94.88 points, or 2.65%, to 3,677.95

·     The Dow Jones Industrial Average rose 550.99 points, or 1.86%, to 30,185.82

·     The Nasdaq Composite jumped 354.41 points, or 3.43%, to 10,675.80

·     The Russell 2000 Index advanced 53.35 points, or 3.17% to 1,735.75

 

Economic Calendar for Today

·     7:45 AM ET              ICSC Weekly Retail Sales

·     8:55 AM ET              Johnson/Redbook Weekly Sales

·     9:15 AM ET              Industrial Production M/M for September…est. +0.1%

·     9:15 AM ET              Capacity utilization for September…est. 80.0%

·     10:00 AM ET            NAHB Housing Market Index, for October…est. 43

·     4:00 PM ET               Net Long-Term TIC Flows for Aug

·     4:30 PM ET               API Weekly Inventory Data

·     5:30 PM ET               Fed’s Kashkari Discusses the Economy

 

Earnings Calendar:

·     Earnings Before the Open: ACI CATC GS HAS HBCP JNJ LMT MBWM SBNY SI STT TFC

·     Earnings After the Close: EQBK FHN FNB FULT HWC IBKR ISRG JBHT LRCX NFLX OMC PNFP UAL UCBI WTFC

 

 

Macro	Up/Down	Last
Nymex	-0.15	85.31
Brent	0.28	91.90
Gold	-6.80	1,657.20
EUR/USD	-0.0018	0.9821
JPY/USD	0.11	149.14
10-Year Note	-0.006	4.009%

 

 

World News

·     The Bank of England is set to further delay its plan to sell government bonds, the Financial Times reported, though the report said it may stick with a plan not to reinvest maturing securities. The central bank, however, called that report “inaccurate,” without saying in what way the report was not accurate

 

Sector News Breakdown

Consumer

·     Hasbro (HAS) Q3 adj EPS $1.42 vs. est. $1.52; Q3 revs $1.68B fell -15% y/y vs. est. $1.68B; reiterates full-year guidance of flat to slightly down revenue in constant currency, 50-basis point expansion of adjusted operating margin to 16%; qtrly results were impacted by acceleration of consumer products shipments by our retailers into q2 due to anticipated supply chain challenges; sees full-year revs flat to slightly lower in constant currency

·     BYD Co (BYDDY) forecast a huge jump in Q3 profit as mainland Chinese motorists increasingly make the shift to battery-powered vehicles; BYD outsold Tesla in the first half of 2022 to become the world’s biggest electric carmaker by sales

·     Carvana (CVNA) downgraded to Neutral from Outperform at Wedbush and lowers price target to $15 from $50

·     Target (TGT) was upgraded to buy from hold at Jefferies saying the combination of a subdued valuation and improvements in the supply chain and inventory positioning supports a bullish stance on the retailer

·     Nordstrom (JWN) announced that CFO Anne Bramman has informed the company of her intention to step down from her role

 

Energy

·     Antero Resources (AR) to replace Alleghany in S&P 400 at open on 10/20

·     Ranger Energy Services Inc. (RNGR) said it expects revenue to range between $330M-$340M and full year revenue is now anticipated to be between $610M-$620M which reflects very strong performance during Q3, accounts for expected holiday, seasonality impacts during Q4

 

Financials

·     Equity Lifestyle (ELS) Q3 normalized FFO $0.70 vs. est. $0.68; Q3 revs $381M vs. est. $345.4M; sees FY22 normalized FFO $2.64-$2.70 vs. est. $2.73

·     Silvergate Capital (SI) Q3 EPS $1.28 vs. est. $1.38; Q3 net interest margin was 2.31% vs. 1.26% a year ago; digital asset customers grew to 1,677 at september 30, 2022, compared to 1,585 at June 30, 2022, and 1,305 at september 30, 2021; average digital asset customer deposits were $12.0 bln during q3 of 2022, compared to $13.8 bln during q2 of 2022

·     Truist Financial (TFC) Q3 adj EPS $1.24, in-line with consensus and revs $5.85B vs. est. $5.93B; reports Q3 CET1 capital ratio 9.1%; Net interest income $3.78 billion, +16% y/y, estimate $3.74 billion; Provision for credit losses $234 million vs. recovery $324 million y/y

 

Healthcare

·     Johnson & Johnson (JNJ) Q3 adj EPS $2.55 vs. est. $2.48; Q3 revs rose 1.9% y/y to $23.8B vs. est. $23.34B; Sales at pharmaceuticals, the company’s largest unit, rose 2.6% to $13.21B above the est. $13.03B; reaffirmed the midpoint of its full-year adj profit forecast range at $10.05 per share; MedTech sales were $6.78B vs. $6.64B a year ago

·     AVEO Pharmaceuticals Inc. (AVEO) agreed to be acquired by South Korea’s LG Chem Ltd. for about $566 million; LG Chem said it would pay $15 a share in cash for AVEO, a roughly 43% premium to Monday’s closing price of $10.48 https://on.mktw.net/3VzJLL2

·     Beyond Air (XAIR) announces positive data from at-home pilot study in patients with refractory NTM lung infection treated with (no) using the LungFit® go at the chest annual meeting 2022

·     Silk Road Medical (SILK) sees Q3 revenue up 51% y/y to $37.4M vs. est. $33.5M; announces $100M common stock offering

 

Industrials & Materials

·     Federal air-safety regulators have asked Boeing Co. (BA) to launch a review of its safety paperwork for the 737 MAX 7, another setback for the plane maker’s push to win approval for the jet before a year-end legal deadline. The Federal Aviation Administration is unable to review the company’s submissions “due to missing and incomplete information” related to cockpit crews’ potential reactions to catastrophic hazards, according to an Oct. 12 agency letter – WSJ

·     Marten Transport (MRTN) Q3 EPS $0.32 vs. est. $0.33; Q3 revs rose 29.1% y/y to $324.45M vs. est. $321.41M; Operating expenses as a percentage of operating revenue were 89.6% for the third quarter of 2022 and 88.7% for the third quarter of 2021.

·     Matson Inc. (MATX) sees Q3 EPS $6.67-$6.79 below est. $7.67; sees Q3 operating income for ocean transportation to be $310M-$35M and expects Q3 operating income for logistics to be $19.0M-$20M; achieved lower y/y Q3 consolidated operating income, saw lower demand for expedited ocean services in the transpacific trade lane

·     XPO Logistics (XPO) sees 3Q revs approx $3.04B vs est. $3.09B and adj EBITDA $348-352Mm vs est. $341.2Mm

·     International Paper (IP) and WestRock (WRK) both downgraded to Sell from Hold at Deutsche Bank in the containerboard sector

 

Technology, Media & Telecom

·     Intel (INTC) is eyeing a significantly lower valuation than previously expected in the IPO of its Mobileye Global Inc. self-driving car unit, according to the WSJ. Mobileye, which was originally expected to land a roughly $50 billion valuation, is now set to Target one of under $20 billion and sell a smaller number of shares than originally planned https://on.wsj.com/3eBQDH5

·     Mobileye Global Inc (MBLY) sees IPO of up to 41 mln shares priced between $18.00 and $20.00 per share – SEC filing

·     FuboTV (FUBO) guided Q3 revs of at least $215.5M vs. est. $209.6M; said “we have concluded that continuing with Fubo Gaming and Fubo Sportsbook in this challenging macroeconomic environment would impact our ability to reach our longer-term profitability goals. Therefore, we have made the difficult decision to exit the online sports wagering business effective immediately.”

·     Juniper (JNPR) upgraded to neutral from underweight at Piper with the expectation that management can continue to increase product revenue numbers in full-year 2023 by around 10% year-on-year

·     Microsoft Corp. (MSFT) laid off more employees this week, becoming the latest tech company to show signs of concern about future demand.